Doug Dayer says that you need only $40,000 to create a game that will earn millions of dollars, with female players being a lot more venturous than males. He has been developing games since 1994, including games for Warner Bros, and his top games are Age of Empires and Quake.

Doug Dayer is an ex-vice-president of Warner Bros. From 2004 to 2006 he used to be an executive GT Interactive producer. “This was the time of the first iPhone” – he says – “It was amazing to work with cool projects like “Harry Potter”, “Batman” and “X-men”. He comes to the Ukraine as a consultant and a managing director of Innovecs U.S. The developer of legendary games, Age of Emprise and Quake, told Delo.ua about 2017 trends in the gaming industry and its risks, he gave recommendations to those who are planning to create great games.

Today the game industry is the fastest growing business in the world. Its numbers are impressive: the industry income from computer games is higher than the aggregate income of TV, cinema and music industries. According to SuperData, it was $91 bln in 2016. https://www.superdataresearch.com/market-data/market-brief-year-in-review/.

In particular, consumers spent around $41 bln in the mobile market in 2016, where the most popular games were Pokémon GO and Clash Royale. PC market income was $34 bln. The most profitable projects were Overwatch from Blizzard ($585 mln) and League of Legends from Riot ($1,7 bln). The number of monthly subscribers for semi-free games was 755 mln people, with those performing one-time game purchase being $154 mln.

What industry numbers do you think are the most exponential?

Doug Dyer D.D. I know for sure that the mobile industry has been annually growing by 10-20%, and it continues to grow. Itsgamevolumeisabout $90 blnnow.

If to put it in short, what has most influenced the game industry development in the past ten years?

D.D. It used to be the epoch of TV sets, now it is the epoch of phones.

The game industry profitability is higher than the aggregate income of TV, cinema and music industries. Howcouldthathappen?

D.D. It didn’t happen overnight, it took several years.

Since what year have you noticed this trend?

D.D. I’ve noticed it in the last 5-6 years. At first, there was the tendency to film a movie first and then develop a video game, now it’s vice versa: first comes a game, then a new movie is released based on this game.

Previously, about $100 mln was spent to develop a game from Grand Theft Auto series, which was considered to be a tremendous budget. Now there are more and more games having the same budget. Not each movie gets such a big budget. It is also important to point out that games earn several billions of dollars easily, but if a movie profits over one billion, it turns out to be a huge deal. But it is typical for games.

Considering the mass market rates and product profits, it is not surprising that the entire directions in the game development (RTS, RPG and others) start to die out. What is the value of niche-game developers? Is there any place for indie-developers in the world of modern high budget projects and technologies? What is their purpose in the industry? What is their value?

D.D. Most importantly, they push creativity and come up with novel ideas. As for such huge projects as Doom, Unreal we are developing today, once they were all created by indie-developers. That is why, the existence of projects like Minecraft is vital for the industry.

So, how do those developers have to survive? What is the most popular financing scheme for their projects? Do big companies accept them or do they find the money on their own?

D.D. As a rule, if the team is self-sufficient, which means it consists of a technical specialist and a person, who can develop the art, they can easily create their own game and upload it to the store.

What is the budget of such a game?

D.D. On average, its budget can vary from $50,000 to $100,000. Today the development itself is more accessible, because there are plenty of free development instruments, such as Unity and Enrico. They allow you to start creating at once, and only after the game starts making money, its authors share some of their income with technology providers.

These guys sometimes apply to big publishers such as Activision. But it’s not always a good idea for them, because they usually lose their creativity in this case, as most publishers take all the rights and decision-making.

Is it actually real to make angels and venture companies interested in startups?

D.D. There is a story about two guys who created a prototype, showed it at the exhibition and found an investor. A bright example is Riot Games company from Los Angeles. Everything started with five people who created a new game, League of Legends, basing on the existing Warcraft game mode. Later on the Chinese investors bought its half for $450 mln. Such developers have always existed, e.g. a Finnish company Rovio with their Angry Birds, or a company that created Minecraft.

There are many people in the Ukraine who are trying to start business in the gaming industry by gathering a small team. What do you need to attract a “big Chinese” investor?

D.D. Persistence is the most important quality. You have to keep on trying. It demands some discipline. Going from the idea to its realization means learning by trial and error. Your execution, that is the way you implement your ideas, will be evaluated just like it happens in any other spheres

Almost anyone can catch their luck. A developer from the Ukraine can create a working prototype, go to the Ubisoft office in Kiev, show them the prototype, and they can successfully finalize the project due to their vast experience.

What is your prediction on the trends in 2017? Which will be the most perspective?

D.D. What we see today is the first generation of virtual reality technology and augmented reality technology.

Just these days we have observed a great prototype from Microsoft HoloLens, it is a gadget uniting both augmented and virtual realities.

It looks spectacular. But you have to keep in mind one thing. Remember the story with 3D TV sets? This technology seemed to be of great potential, but with time it faded. But mobile technologies turned out to be successful, everybody can use them. So to invest or not into Virtual Reality and Augmented Reality is a great issue (the profit of Virtual Reality market was $2,7 bln in 2016, its monthly number of players is on average 16 mln, these data are given according to SuperData https://www.superdataresearch.com/market-data/market-brief-year-in-review/

Do you think it is worth waiting a little? Just to see what are the biggest companies going to do?

D.D. First of all, the developers have to figure out how to use these technologies in their development process. Today there are some big guys who can invest tremendous amounts of money. But I see two options here. Either to invest, as I did in the past. But it didn’t work for me personally. Or to wait and see how the others will do, but then you risk falling behind.

In this case, it is important to understand that the technology has to be applied properly. I don’t think that Virtual Reality will dominate in the gaming industry. The same thing as with 3D films will happen: partly a movie will be released in 3D, whereas another part will be an ordinary one. So will games. There will be games with AR and VR, but our regular classic games will remain.

What are the indicators to define a project success?

D.D. Well the indie-developers are likely to be quite promising: they can invent something that will make people constantly use this technology several times a day, and it will become their habit, i.e. a part of their daily routine life. It is the time when they will get incredible success. It doesn’t have to be a game, it may be something in the field of medicine and health or in banking, it should be something that covers a certain need. Such technologies as augmented reality has long been with us, but only now its usage has started increasing. It means that no killer-offer, namely, something that everybody would like to get, has appeared yet.

What genres (action, shooter, strategy) will be popular in 2017?

D.D. We should expect projects to mix different genres. More and more games from Asia are becoming popular, they combine casino (lottery) and game mechanics plus RPG (role-playing games). Or game mechanics is combined with adventures. A great example is Puzzle projects and Monsters, or “Dragon Puzzles”

I have been working in this industry since 1994 and can tell you that everything has been already invented before. The idea does not consist in the kind of innovations you can come up with, but how you will realize them, and which features you will use to show them. Minecraft game was created in the sandbox genre, where visual graphics is almost absent, but it is crazy popular. People from 5 to 75 years old are keen on it, because you can do whatever you like. So the one who will be able to provide wide audience with something novel, is going to be on top.

How can we track people’s preferences? You have been doing this since 1994. What has changed? What can people be hooked on?

D.D. Most games are competitive. This competition spirit accompanies the games against other players or against the artificial intellect; it does not matter whether you play with a thousand people or by yourself, you still compete trying to improve the score.

Playing the most popular game Minecraft, some people attempt building New York almost in its full scale. They do it to show they are better than others.

The thrill – just like in sport games – has to be part and parcel of any game. Each person has this drive to get better, better, and better. This competitive spirit can create a timer, when you are trying to defeat time, someone may try to kill you, and you compete against this person. These things are typical for all genres, genders, and age groups. If you want to be successful, you have to realize yourselves qualitatively.

What are the most popular games based on sport competitions?

D.D. FIFA is released year by year, and it is getting better and better. Now players possess absolutely fantastic opportunities: they can create their own teams or even a league, where the team will play.

If we take the events taking place in American football – Superball, today before the game starts, they create two similar teams with similar sets of players, and they are made to practise 500 games against the computer. It helps to predict game results. Of course, sport events are much greater than just games. If you want to penetrate there, you have to invent something absolutely new, because these big guys are dominating this area.

Many famous developers often return to their old games, though quite successful products, and re-release them, or develop completely new modern projects based on these franchises. Whatsurprisescanweexpect?

D.D. Yes, old games are released again, and it happens all the time. One of the last examples is a new part of StarCraft released by Blizzard. Even if we talk about such a huge Japanese company as Nintendo, they bought their previous competitor, Sega company, and started releasing old games, for example, Sonnik. They continue to release their Mario series. I won’t be not surprised to see really old games, such as Pac-Man and Defender, again.

But I would like to point out that once there was a set-top box NES, and now Nintendo has released it again. You can buy the oldest cartridge set-top box of the most modern production, it is 8-bit and sold in millions. The super old set-top box Atari is also expected to be the same. It means that old things are now released as new ones.

Given that mobile gaming is developing so fast, is there any sense in Pocket Game Devices? Canespeciallypowerfulgadgetscutforgamingappear?

D.D. I don’t think so, because modern phone screens already have practically the same picture quality as TV. Although, as a kind of option, if Google properly made Google Glass with a good quality picture, 3D sound, consumers would dive in, but at the same time it would not be “blind”… But it is useless to make such forecasts, because a brand-new gadget will appear, which will turn around the market.

What new risks do developers expect in 2017? And what are your recommendations on how to minimize them?

D.D. If we talk about game developments, the most important feature is the hit industry. 20% of your products will earn 80% of profit, and 8 out of 10 games you are working on, will fail, but 2 hits will allow you to make money.

When you invest into anything new, the risks are the same, in addition, you are going to face new ones: you don’t have enough professionals. There is no stable model. For example, there is a growing trend of Virtual Reality. But it can’t be said to sell well today. Although, a lot of investments are made in this technology, in fact, billions of dollars, but it is not yet clear how to get profit out of this technology.

What people are trying to do now is to minimize these risks. For example, they use ready-made engines. You don’t have to think how to develop your game for a specific platform: a set-top box, mobile, or PC. You just use Unity or Unreal (two leading platforms for game developments), and in one click you release a game build for one platform, another platform, or third one, and thus cut your costs. Therefore risks stay the same, you should just learn to manage them properly and try to reduce your expenditure.

What are the top platforms? Is it better to focus on one or strive for multiplatform development – mobile, console, PC?

D.D. Mobile platform will, of course, continue to grow, and it will be the fastest growing platform. On the other hand, Microsoft released its new XBox, Sony released its new console, and their renewal 3-4 year-cycle is preserved. Mobile games will not be able to replace completely the experience you get while sitting on your couch and playing in front of your TV.

Nowadays almost everyone is trying to follow the multiplatform way so that to widen their coverage and become more available. More powerful mobile devices are becoming, the more games can be played on them.

There is one more innovative approach to mobile games, the so-called companion-applications. A big game is released, and it is accompanied with a mobile application allowing people to do something for the game, for example, to do crafts (creating objects) or complete some quests. Thus, while being at work, you are busy with something your employer is not expecting you to do, namely, you play in Warcraft quests, then you come home, and again you play them in front of your TV.

Our life is a game, as Shakespeare pointed out in the 16th century…

D.D. That was exactly the Pokemons played their game on. Developers tried to turn daily human activities into a game. They succeeded in doing it, Pokemons at their peak were earning up to $3 mln per day. At present 50 developers are trying to make clones and repeat their success. Let’sseeiftheymanagetodoit.

Gamification (implementing game approaches into non-game related processes to attract consumers) is penetrating into all spheres of our life.

Take fitness trackers, for example. I aimed at making 15 thousand steps per day, and every day I compete against myself, trying to top this result.

Advertisement is also gamified. Just like any other loyalty system: have lunch 10 times, get the next one free.

Which genres would you recommend young Ukrainian developers to work on?

D.D. It’s not an easy question. I would say, if you are young and inexperienced, try to do something for the audience as big as possible. Something really simple, for example, a puzzle. You don’t have to aim at building another PleyShin Call of Duty. Try to do something you yourself would enjoy playing, something you are sure will work. Arrange everything in this game in a simple way: get rid of extra things and do something simple, but good. Take an example, a game Flappy Bird, where you just manipulated one bird, it was easy, but it was fun.

Mobile platform is in its first or second generation now, and it has a huge potential, so there is still room for killer applications. There are Candy crush, but there is still something to create and invent.

What is the budget to enter the market?

D.D. I would like to take an example from my real life. It happened to me when I worked in GT Interactive. Once I was talking to representatives of Walmart supermarket chain, where they had weapon departments. They offered: “Guys, what if you could make a game to hunt deer, we would sell it”. Our developers created this game and called it Deerhunter. We spent around $40 000. This game was sold in the weapon department. It was created in such a way that you could play it with one hand and hold a beer can in another. The price for this game was $25, today it could have probably released in tens of billions. That’s why you don’t need anything extraordinary to enter this market.

Is it true that women comprise half of the game industry?

D.D. If we talk about the relationship between women and the game industry, 50% or even more play games, especially mobile games.

As for their taking part in developing games, the realistic figure is about 20-25%. They take main positions in testing, drawing art, marketing and PR. IT developers are primarily men, and female developers take only 7-8%. By the way, women occupy nearly the same share in Hollywood. Although, the situation is changing, and gaming industry is opening up.

What are the most successful games created especially for women?

D.D. Female games is a good business idea. Because women players spend more money. If we take classical models of free-to-play games, where you play for free, but you have to pay for something (for example, when playing Candy Crush Saga you get access to a new level for 99 cents), women tend to spend 50% more than men.

One of the popular games is the one developed on Kim Kardashyan’ s brand.

Developers, who create games for girls, start gaining their interest when they are very young. If you look at the games my 5-year-old daughter plays on iPad, there are tons of them, and they are all based on Disney cartoons about princesses. I see the new generation coming, they will be a lot more involved into technologies compared to the millennials.

CONTACT US NOWLooking for a technology partner in Gaming & Entertainment?

Please leave this field empty.

I agree to receive emails from Innovecs with the latest news, industry insights, and whitepapers.

A technology executive for over 20 years, Doug previously held leadership roles at Microsoft, Open Wager, THQ, and Warner Brothers. He was CEO of publicly-traded Oasys Mobile and most recently consulted for leading game, ad, and payment companies. Doug has helped launch over 120 media products on all platforms accounting for $100s of millions.